In a secluded country lodge, a small group of affluent investors convene for breakfast, sporting expensive gilets. Their day’s agenda includes a presentation by a private healthcare company, with an MP and several bankers in attendance. The head of the startup unveils a proposal for a significant public-private initiative in the UK, aiming to partner with the NHS. Following the presentation, the group dons their wellies and heads outside for an exclusive pheasant shoot.
This scene from the recent BBC drama series Industry lingers in my mind, not only for its fictional quality but also due to its stark reflection of reality. As waiting lists for medical care grow longer, investors seize opportunities behind closed doors, capitalizing on the NHS crisis. According to the Financial Times, private equity firms have made 150 deals in the past two years, acquiring various healthcare companies in the UK. Ambulance fleets, eye-care clinics, and diagnostics companies are among their acquisitions. Recently, one private equity firm even purchased a staffing agency employing NHS doctors and nurses, anticipating a lucrative business surge from the backlog of rescheduled appointments.
From a financier’s perspective, this trajectory makes perfect sense. In a sluggish economy, healthcare stands out as one of the few booming sectors. The aging population, advancements in medical technology, and the strain on the NHS create a surge in demand for private healthcare in England. Harley Street, once the hub of the industry, is now witnessing a shift, attracting a new breed of customers who are financially less fortunate and desperate. Shockingly, nearly one in seven people in England are waiting for routine hospital treatment, often struggling to secure GP appointments. Many opt for private healthcare simply because they have no other choice. The NHS, once a seemingly unassailable institution, now faces real-time dismantling.
The rise of private equity firms in healthcare represents a striking symptom of a remarkable economic experiment. In the last decade, with dwindling returns on traditional investments like government bonds due to low-interest rates, investors have flocked to the private market in search of higher returns. This trend has resulted in a surge in private equity deals. When the finance world’s high-octane players invade domains like hospitals and nurseries, it serves as a gloomy testament to the exhaustion of opportunities for productive investment. Instead of fueling innovation, investors now capitalize on fundamental aspects of human survival.
Germany’s experience with private equity in its healthcare system should serve as a cautionary tale. While widely praised by right-wing thinktanks in Britain as a model to emulate, Germany has witnessed numerous private equity deals targeting medical practices in recent years. More than 500 ophthalmology practices and hundreds of dental practices have been acquired by firms. The consequences of these deals raise concerns for public health. Eye doctors report facing pressure to maximize profits by upselling additional services to patients, including unnecessary examinations and procedures. Dentists have admitted to drilling healthy teeth. Despite investor-run medical practices denying a sole focus on quick profits, the opacity of this industry makes it challenging to assess the true extent of financial gains or the number of practices subjected to buyouts.
Similar scenarios have unfolded for years in the UK, where successive governments have starved the NHS of adequate funding. Private equity firms simply represent the latest wave of investors seizing these opportune moments. Under the guise of reforms, politicians have fragmented the NHS into smaller components, creating room for private providers to enter the scene. The blurred lines between public and private and the transformation of citizens into consumers make it increasingly challenging to distinguish where one sphere ends and the other begins. A considerable number of NHS consultants in England now own shares in private healthcare firms, while private companies already handle thousands of blood tests and knee operations. While trying to book a GP appointment, I was directed to download an app promoting a selection of privately paid-for tests.
One consequential effect of this trend, as philosopher Chiara Cordelli illuminates, is the erosion of public trust in institutions and services. As public institutions become less visible providers of the services we receive, our confidence in them wanes. Meanwhile, the government’s dependence on for-profit firms to deliver these services leaves it at the mercy of these same entities. This self-perpetuating cycle explains why the situation persists and why there is a dearth of imaginative solutions from the Labour party. Shadow Health Secretary Wes Streeting, when pressed to address the NHS crisis, echoed his Conservative counterparts by pledging to enlist private companies to tackle waiting lists. This stance may have garnered support from investors but is worrisome for patients, as it signals our politicians’ lack of commitment to reversing the decline of our public health service.
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